Dictated largely by dwindling resources and the always-on customer, Blake Cahill, Philips’ Global Head of Digital and Social Marketing, has ingrained digital within the DNA of the organization.
The changes are reflective of Philips’ adaptation to a new era of global competition.
The journey began very simply.
At his desk on a computer screen in the Amsterdam headquarters, equipped with a list of products and Google’s homepage, he trawled through hundreds of shavers, toothbrushes, coffee machines, headphones and PC accessories to see where they ranked by comparison to competitors, and of course, to see if they were on the first page.
He wasn’t pleased with the results.
“They did not show us where we needed to be,” he says, “which obviously is on the first page of every search engine.”
A man who loves boiling things down to the fundamental basics, Cahill took his findings to various executives of the Dutch technology company who said, “well of course we have to be on the first page.”
“It was a concept so simple they just couldn’t disagree.”
Taking things back to basics, of course, was never going to be enough to catalyze the dramatic marketing transformation of the 125-year old business, which has always done marketing “very traditionally.”
Why should I be building this digital DNA inside other agencies?
Then again, Cahill is a rare breed of business leader. He brings with him 20-years worth of experience from companies ranging in size, from software companies to digital agencies.
“I was even a start-up guy too, at one point,” he explains.
With marketers spread far and wide across the company, Cahill faced a difficult task.
The most important piece of this marketing transformation rested on creating a new framework to ensure consistent messaging and processes were rolled out to all 17 markets across 10 different business groups.
“What I was really after, was a structured mechanism that would allow us to move at speed, the speed at which digital continues to shift, from social platforms into messaging platforms, from e-commerce to mobile commerce.”
Marketers were also used to outsourcing end-to-end campaigns to agencies, something Cahill had a particular problem with because it reduced agility, control, and most importantly, stunted the growth of digital skills within the organization.
“Why should I be building this digital DNA inside other agencies when I can bring technology to Philips that will allow marketers to better own our customer relationships, as well as drive results and be more effective?”
And so, Cahill endeavored to instill what he describes as digital marketing prowess within the very DNA of Philips.
With the tectonic shift to multiple platforms, its marketers needed to reach consumers across more and more touch points.
His aim, as part of the group marketing transformation, was to match the always-on nature of consumers today.
Take male grooming products as the example here: with such a high proportion of the customer journey being done digitally – at around 80-90% – “harnessing the digital mind-set,” or optimizing experiences for every platform, had to be an essential change made.
Rather than re-visiting a campaign at its close and learn retrospectively how the next campaigns should be optimized (campaigns can run for as long as six months), Cahill and his team now do it daily.
They make tweaks and changes to things that haven’t worked so well on the fly, directed by huge amounts of customer data.
“We’ve been able to change creative and get 20% higher media returns and sales, simply by optimizing on a daily basis.”
Changing business models for changing times
Philips’ marketing transformation has coincided with a particularly important juncture in its history.
In 2012, its business model changed entirely.
“We moved from boxed products to connected products, services and propositions.”
This meant focusing less on boxes on shelves, consumer goods or enormous MRI machines serving in hospitals for 10 years then to be thrown away, to instead focus on monetizable software updates.
Replacing products less regularly reflects Philips’ drive toward the ‘circular economy’.
CEO Frans Van Houten laid out the strategic vision in a McKinsey article with the view that, “those companies solving the problems of resource constraints will have a competitive advantage.”
It is part of a wider change taking place as a result of global resource constraints paired with shifting consumer preferences, forcing the hand of businesses to address both sustainability and climate change.
For business customers as an example, Philips now offers lighting as a service.
Customers only pay for the service they receive, in this case, the light produced by the bulbs themselves. And Philips installs the equipment, maintains it, and, “makes sure that it runs for a very long period of time.”
The benefits in this case result in energy savings of 50 to 70% when compared to regular lighting.
Such a radically different approach to its old business model of course throws up challenges.
No longer is Philips able to think in the now, but instead must think end-to-end, inclusive of sales, production and suppliers for 15 years per product.
Marketing becomes a different ball game entirely too, meaning Cahill is faced with the task of building campaigns for longevity, despite the constantly changing nature of consumers.
There is also the cultural piece to contend with. Ensuring Philips’ employees have “digital as part of their DNA,” is easier said than done.
Everyone needs to be pointing in the right direction once the fundamental plumbing that sits behind Philips’ new business model has been put into place.
Arguably, this is the hardest task.
“After all,” he says, “if you are creating technology led change, it becomes impossible to deliver unless you really transform people, processes, and change behaviors.”
“If no one changes, then things will be done in the same way they always had been. Despite the advances.”